Jonathan Cleveland is the Managing Director for Houlihan Lokey, a global firm with expertise in mergers and acquisitions, financial restructuring, and more. Today’s discussion focuses on how to spot and handle distressed companies. Although Jonathan works with companies who average around a billion dollars in debt, the lessons Jonathan talks about apply to all businesses.
[1:55] At the Houlihan Lokey firm, they have three main divisions. Jonathan explains what each of these divisions are and how they help their clients.
[3:10] What’s Jonathan's background, and how did he get involved with the firm?
[6:00] Houlihan Lokey works with high-scale clients. The average debt level for a client is around one-and-a-half billion dollars.
[7:50] How do distressed companies get so deep into trouble? Is it because they have an easier time accessing capital?
[11:25] You know your industry is in trouble when the guy on TV says, ‘This time it’s different.’
[12:55] Let’s say the industry or sector is doing okay, how do you tell when an individual company is in trouble?
[17:15] The rest of your business operations can get a bottleneck when the company is focusing on paying off high levels of debt. It can often be a Catch-22.
[20:15] If lenders feel unsure you are able to pay off the debt, they can re-price or even increase their rates.
[22:30] What types of distressed companies come to Houlihan Lokey?
[26:25] Who makes the call to get help? Is it the bank or maybe even the CEO of the business?
[30:20] What are some of the biggest mistakes distressed companies are making?
[34:25] How does Jonathan access the executive team?
[37:20] A lot of human psychology is used when interacting with a distressed team.
[37:30] Failure challenges our ego.
[39:10] You need to have a real awareness over the consequences of borrowing money.
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